What Listing and Buying Agents Need To Know About High Flood Risk Properties: A Snap-Shot View
In the middle of all the flood changes that have happened over the past few years, knowing what you need to do as a Real Estate professional can get tricky. To add confusion to the situation, most articles and discussions on flood insurance and flood changes leave people more confused than enlightened. We decided to compile a brief, nuts-and-bolts format for Real Estate professionals to give a quick “snap shot” of what listing and buying agents need to know when dealing with flood insurance on properties.
What Listing Agents Need To Know:
Talk with your client and ask if the property is in a special risk flood zone. Ask if they have a current flood policy; ask for a copy of the policy and a copy of the elevation certificate if they have one. There is a chance that the property, pending that the zone noted on the policy matches the current zone determination, may be transferred to the buyer…which could give you a great selling tool.
Bottom Line: You may be able to transfer the existing flood policy from the seller to the buyer. Always ask if they have an elevation certificate as this can be really helpful for the buyer and can be a strong selling point for you.
In some situations there will be a property that does not carry flood insurance currently, but the buyer will be required to carry flood coverage if they are obtaining a federally backed loan. An example of this could be if the house was purchased by a cash investor or if the home is paid for and the current owner decided to let the flood policy lapse since it was no longer required by the bank. If there is no existing flood policy in place, consider getting a flood quote for the property so you can get an idea of the flood premium. This is helpful to know before getting into the sales negotiations.
If the property is rated in a very high-risk zone with a high premium, it could make the property much harder to sell. You may consider speaking with your client concerning getting an elevation certificate or looking into mitigation options to lower the premium and make the home more marketable in some situations.
Bottom Line: If there is not a flood policy on the property, it’s a better practice to know what the zone and flood premium would be before entering into the sales discussion.
What Buying Agents Need To Know:
The most important take-away for a buying agent is to know the flood zone of the property before you place an offer. Remember the previous point under the listing agent’s section? The existing owner may not have a flood policy….but do you want to find out that the property is in a high-risk flood zone and that the premium is $4,ooo a year after you’ve placed an offer and your client is in love with the house? Probably not.
Another good practice is to ask the selling agent for a copy of the existing flood policy if applicable and the elevation certificate if available. If they do not have an existing policy or certificate, call The Choice Insurance Agency and ask us to map the property to provide the zone and premium for the flood insurance. We provide this service as a free resource for you. We can answer any questions you have and provide a zoning determination, policy premium and recommendations on possible mitigation options for clients referred into our agency. We’ll even provide a list of our preferred partners that can do the mitigation work for you if you’d like the resource.
Bottom Line: Always check on the zone and premium for flood before placing an offer. We provide this as a free resource for you and taking this step can save you countless hours and lost closings. Always ask if there is an existing flood policy and ask for a copy of the policy and an elevation certificate if available.
Additional Points To Note:
– The definition of “flood” is ground water rising. This means that if a city main water line breaks and floods your property….that would be considered a “flood” and is only covered under your flood policy.
– There is never any coverage for flooding on any home owner’s policy.
– It is a best practice to always advise your clients to get flood insurance regardless of the zone or mortgage requirements.
Have additional questions? Do you need us to map a property for you? Are you looking for a recommended partner for mitigation or financing a property? We can help! Give us a call today at 757-416-5100. We’re happy to help at any of our three local locations or by phone or online…or Facebook…or email…We’re pretty much everywhere.
The Choice Insurance Agency. We’re on YOUR side. 757-416-5100.
The Choice Insurance Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Choice Insurance Agency can do for you today. Give us a call at 757-416-5100 to speak with one of the licensed, professional members of our team or request a contact here. The Choice Insurance Agency. We’re on YOUR side.757-416-5100.